Moody's upgrades Weyerhaeuser

Moody's Investors Service said it upgraded Weyerhaeuser Co.'s senior notes to Baa2 from Baa3. The outlook is stable.

The agency said the upgrade reflects the company's solid earnings momentum and Moody’s view that the company's financial performance will strengthen with stronger demand as U.S. housing starts continue to improve towards normalized levels.

Weyerhaeuser's Baa2 rating is primarily driven by the company's extensive timberland holdings, which generate significant earnings and provide debt-reduction capability and liquidity; its scale and leading market position in timberlands, wood products and market pulp, Moody’s said.

In the agency’s view, this is tempered by the volatility of the company's softwood pulp, lumber, oriented strandboard and engineered wood products businesses and by the company's limited free cash flow generation given its REIT structure, the agency said.

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